Advicero Nexia offers tax advisory, legal, accounting, corporate services as well as payroll support. We help both foreign and Polish entities investing in Poland. Advicero Nexia is part of the worldwide network Nexia International – one of the 10 largest auditing and consulting networks in the world, present in over 115 countries.
Can you briefly introduce the work that Advicero Nexia does in the energy sector?
We mainly offer tax advisory services to companies operating in the renewables sector. We assist investors in acquiring renewable energy projects – we do due diligence work and then transactional advisory and structuring. We have had numerous requests from clients to assist them in setting up a presence in Poland, including investors, developers and companies providing services to this sector.
What are the key legislative changes, from a tax perspective, that have impacted the energy sector in the past 12 months?
An important change relates to VAT taxation and obligatory split payments, which came into force in November 2019. In short, the net amount reaches the regular bank account of the seller or service provider, and the VAT amount is transferred to a special VAT bank account. The change was made in an effort to diminish frauds related to VAT. It sounds complicated but having a proper advisor can help clients navigate the system with relative ease.
In September 2019 Poland also introduced the “white list”, an online register of VAT payers which contains crucial business information about contractors. The register makes it possible to verify VAT taxpayers’ information and check their records for the previous five years.
There is no explicit legal obligation for taxpayers to verify their contractors' bank accounts through the white list, however, the new rules indirectly impose an obligation to execute bank transfers using bank accounts published in the e-register (in respect of all B2B transactions exceeding PLN 15,000 including VAT). Sanctions for making payments to bank accounts other than those mentioned in the white list came into force on January 1st 2020 and concern non-deductibility of related input VAT as well as non-inclusion in tax costs.
Legal instability can be a great challenge for investors. Does Poland offer a safe environment from this perspective?
There have been issues in the past, for instance related to the real-estate tax policy. Sudden changes increased the burden of this tax by even approximately four times, which inevitably impacted investors’ projections and their expected returns. This, together with a delay in auctions, led to a situation where many investors gave up and exited the Polish market. However, those who decided to stay either negotiated with local authorities or went for court proceedings, and eventually, as a result of another change in real estate tax law, managed to restore the tax to its initial level.
Legislative changes are of course crucial but not necessarily deal breakers for entry into the Polish market. This risk can be managed if investors have good advisors who keep them informed on an ongoing basis.
With a purpose to encourage innovation in Poland, an R&D tax relief has been introduced. Who can benefit from this incentive?
The R&D tax incentive is a fantastic instrument introduced in 2016, and amended in 2019 so that more companies can make use of it. Presently, R&D activities that qualify for tax deduction include traditional scientific studies as well as any development works - for instance, combining existing knowledge to improve manufacturing processes, increase efficiency or the quality of products. R&D relief is thus potentially available to all businesses that carry out improvements, not just disruptive innovations.
Tax relief also applies to wages of employees that carry out R&D, the purchase of commodities and raw materials, the cost of expert opinions and patent rights, protection rights and registration of the industrial design. This incentive was well received, though there are still taxpayers that are not aware of its existence and would benefit greatly from it.
In your experience, what are some common challenges investors face when entering the Polish market?
One challenge is that we have Parliament members who are not in favor of renewable energy, and this inevitably influences the population’s attitude. At times this led to protests and beliefs that renewable energy bears more disadvantages than benefits, especially wind farms. But overall the country supports this direction and most often people understand that this is the way of the future.
Do you have a final message for investors that contemplate expanding to Poland?
It is no doubt a good time to invest in Poland and there is still room for newcomers. Understanding the specifics of the local market is key, but this is attainable with the help of local experts.
